from the good-and-bad dept

This isn't a huge surprise, but in Righthaven's big appeal concerning the key issue over which it lost all of its cases -- whether or not it had standing -- has resulted in yet another huge loss for Righthaven. The court basically agreed with every single other court that has ruled on this matter, noting that when Stephens Media "assigned" the copyrights to Righthaven, it really did no such thing. Instead, it merely assigned the bare right to sue, which you can't do under copyright law. Considering how some of our critics insisted that Righthaven would win this point on appeal, I'm curious to see how they respond. The court basically agreed with all of the points that a bunch of district court judges had all pointed out: the Strategic Alliance Agreement (SAA) left all the power in the hands of Stephens, including ultimate control over every single one of the official rights associated with copyright law under section 106. Thus, it did not, in fact, assign the copyright, and Righthaven had no standing to sue.

The SAA provided that Stephens Media automatically
received an exclusive license in any copyrighted work it
assigned to Righthaven, so that Stephens Media retained “the
unfettered and exclusive ability” to exploit the copyrights.
Righthaven, on the other hand, had “no right or license” to
exploit the work or participate in any royalties associated
with the exploitation of the work. The contracts left
Righthaven without any ability to reproduce the works,
distribute them, or exploit any other exclusive right under the
Copyright Act. See 17 U.S.C. § 106. Without any of those
rights, Righthaven was left only with the bare right to sue,
which is insufficient for standing under the Copyright Act
and Silvers.

The appeals court walks through each one of Righthaven's attempts to get around this basic fact and shows how none are even remotely persuasive, because all ultimately show the same basic argument, which is that the copyright was assigned to Righthaven who then handed back an exclusive license to Stephens. The fact that Righthaven retained none of the key copyright rights shows that this was all a sham. Or, as the court notes, it "emphasizes form over substance." The court also rejects Righthaven's claim that the agreement was later fixed, by pointing out that what matters is the standing at the time of the lawsuit.

The ruling isn't all great, however. The court did overturn the part of the Hoehn ruling in which the court had said that his use of the Las Vegas Review-Journal article (even the entire article) was fair use. Basically, this is a bit of a procedural thing. Effectively, the court is saying that once the district court ruled that Righthaven had no standing, there are no other issues to rule on, so the fair use ruling is inappropriate. This was the part of the case that the RIAA, in particular, wanted thrown out, because it doesn't want any ruling on the books saying that using an entire work might be fair use. And, on this front, the RIAA got its wish. While the court doesn't say that the use was not fair use -- and in fact notes that "we understand why the district court reached the fair use
issue" -- it also notes that, legally, the court really has no right to delve into that issue after it's decided that Righthaven has no standing.

because we agree that Righthaven did not
have standing, it is not appropriate for us to go further or for
the district court’s alternative ruling to stand. We therefore
vacate the portion of the district court’s order that analyzed
the merits of the fair use defense and granted the motion for
summary judgment.

This is not a huge surprise, but it is unfortunate, because the original Hoehn ruling on fair use was a great example of how using an entire work can be fair use. There are other such cases, but losing one of those rulings is unfortunate.

Either way, this should confirm that Righthaven is officially dead and buried. I can't see them appealing to the Supreme Court, though stranger things have happened (just like Prenda took over the mantle of absolutely crazy copyright trolling from Righthaven a long time ago).

from the is-this-finally-over-yet dept

Sure, sure, this year we've all moved on to the crazy stories about the Charles Carreons and Prenda Laws of the world, but let's not forget that last year there was just as much focus on Righthaven's copyright trolling operation collapsing after judges realized that it was all effectively a sham in which the real copyright holder (mainly newspaper publisher Stephens Media) had not really sold off its copyrights to Righthaven, meaning that Righthaven had no actual standing to sue. Technically, Stephens Media tried to give the copyright to Righthaven, but since it retained all of the listed rights under copyright law, it was clearly not an actual transfer. In one of those cases, concerning a guy named Wayne Hoehn, who fought back against a Righthaven lawsuit filed against him, Hoehn's lawyer, Marc Randazza fought for and won a request for legal fees. Righthaven stalled and complained and bullied, but the court told Righthaven to pay up.

Eventually, since Righthaven refused to cough up any money, the court granted Randazza's request to put Righthaven into receivership. That eventually led to the "sale" of various Righthaven assets, including the Righthaven.com domain name, which sold for $3,300 to a hosting company that promised to resist bogus takedown notices.

In May of last year, we noted that the receiver was now planning to sell Righthaven's copyrights, since they were the only remaining "asset" from Righthaven. Of course, this seemed fairly tricky when you thought about it. The whole reason Righthaven lost the case was because it didn't actually hold any copyrights. But, of course, it claimed it did, so in some twisted way, you could maybe sort of possibly argue that what was being sold was the possible rights to those copyrights if Righthaven ever got through its appeal and won. But that seemed highly speculative, and we couldn't figure out who would want to buy such a thing, other than for the novelty of it all.

Except... as has now come out, Randazza (somewhat brilliantly) approached Stephens Media (who started this whole thing in the first place) and asked them if they wanted to buy the copyrights (which, the court's ruling in this exact case had said they actually still owned). I don't know exactly how the conversation went, but you can think through the implications fairly quickly.

Stephens Media, who set up Righthaven, and would have liked for an appeal to go forward showing that Righthaven owned the copyrights, even though it was still using the works and retained all the control. But, suddenly, if Randazza is offering them back the copyrights and they refuse, they're somewhat screwed. Because... first, it's something of an admission that they don't actually believe Righthaven had the copyrights in the first place, which is an admission they don't want to make. Second, if those copyrights are sold to someone else, that someone else could likely sue Stephens Media for still having those stories up without a license -- and then suddenly Stephens Media could find itself in court with the most convoluted copyright case imaginable, in which any argument Stephens makes hurts them elsewhere. It's mindbogglingly amazing. Stephens was effectively tied into a pretzel with any move that doesn't involve buying back the copyrights they "already own" potentially leading Stephens to an involved and problematic court case.

Oh yeah, and also I would imagine that getting money into the receivership that "satisfies" the court's awards probably would mean that Hoehn and Randazza don't then go after Stephens Media directly for the funds, considering how much they controlled Righthaven. As such, Stephens "buying" back those copyrights was probably seen as a strategically wise move.

Presently, the Righthaven Receivership Estate consists of $85,000. $80,000 of this was obtained from a private sale of Righthaven’s rights back to Stephens Media LLC, the creators of the works underlying many of Righthaven’s more than 275 lawsuits. While this was not obtained at auction, prior auctions for Righthaven’s rights failed, largely due to their indefinite nature. After searching for buyers in the face of the auction’s failure, Righthaven’s rights acquired from Stephens Media were sold back to their original source in a commercially reasonable manner, as no other market existed for them. As the Receiver in this limited receivership, I am satisfied that no other method of sale could have brought a higher price.

In the end, the money was distributed with $11,600 going to the two different people who acted as receivers in the case, $18,400 going to Wayne Hoehn who brought the case, and the remaining $55,000 going to Randazza Legal Group for all the legal fees accrued. While the money to Hoehn and Randazza was less than the court had initially ordered, given the lack of any actual assets from Righthaven, the fact that they were able to get this much, out of Stephens Media, no less, is pretty impressive.

from the not-looking-good dept

These days, with the likes of Prenda Law and Charles Carreon, it feels like we've all forgotten last year's favorite legal punching bag: Righthaven. While its comical failures had resulted in at least one of its major appeals going away, the company somehow convinced another lawyer to represent it, and he actually showed up in the 9th Circuit appeals court yesterday to try to revive Righthaven's chances in two of its key cases: the DiBiase case and the Hoehn case.

Syverson tried to argue that the deal with Stevens Media, the parent company of the Las Vegas Review-Journal, involved an actual copyright transfer. "Righthaven and Stevens Media were well aware of the Silvers case and attempted to comply," said Syverson early on in his argument.

"It looks like form over substance," said one of the judges on the three-judge panel. "It seems like an attempt that's too cute by half to get around Silvers."

Another judge noted that Stevens could take back any of the rights at any time, meaning any "transfer" of copyright wasn't very meaningful. Righthaven couldn't really have licensed the copyrights or published the articles it had the rights to, since Stevens Media could have reclaimed those rights at any time.

If you don't recall, the key issue was that Righthaven never really had any control over the copyright in the cases. They involved content from the Las Vegas Review-Journal, but the agreement between Righthaven and Stevens Media (the owner of the LVRJ) made it clear that the LVRJ had full say in things and could take back the copyright at any time. In effect, the only thing really transferred to Righthaven was the "bare right to sue" and you can't do that, because such a "right" is not a separate right of copyright. You can only transfer one of the actual listed copyright rights (e.g., the right to reproduce, distribute or perform) and with that comes the ability to sue. The Silvers case referred to above is Silvers v. Sony Pictures which makes that point clear.

That said, as Joe Mullin reports in the link above, the appeals court justices seemed somewhat less bought into the idea, raised in the Hoehn case, that the use of the LVRJ material was fair use. That's unfortunate. It was a good ruling that found that even when you repost a full article it can be fair use. The argument was mainly that when Wayne Hoehn posted it, it was not for the same purpose or in any way competitive with Righthaven (who merely wanted it to sue). But the court wasn't as receptive to that argument:

First of all, Hoehn's use wasn't "transformative," noted one judge on the panel. "How is the nature and character of the article changed at all, by posting it to a website?" he asked. "Have you ever seen a newspaper that didn't have space for letters to the editor, or a space for comments?"

Just the fact that he meant to inspire debate doesn't justify copying the full work, said another judge. "What if I copied Justice Sotomayor's book into a blog post and invited people to comment on it?" he asked.

Hopefully the panel reconsiders before issuing its ruling. The way Hoehn used it was not the same way that Righthaven or the LVRJ were using it -- and it's that aspect that was transformative. Still, it won't surprise me if that argument fails, but it will be unfortunate. Either way, if Righthaven actually "wins" on that point, it won't much matter for the company, considering its likely to lose on whether or not it even had standing to sue in the first place. However, for those of us concerned about fair use, and how widely it can be applied, this second issue may be a lot more important. Having a strong fair use ruling on the books concerning the reposting of full content (in a particular context) would be a good thing to have, though it sounds unlikely.

from the drop-the-bomb dept

Last month we wrote about an interesting case in which a judge effectively called the bluff of Malibu Media, a copyright trolling operation that has filed 365 lawsuits, targeting about 6,000 people. And, of course, it's never taken a single one to an actual trial, because that does not appear to be the goal. Instead, it's all about getting people to settle, and it sounds like Malibu has been successful on that front. In the case we mentioned last month, the judge made it clear that he wanted Malibu Media to actually go through a trial, and highlighted four defendants who had claimed innocence, and wanted to use those as a "bellwether" trial, to effectively test Malibu's theories. The judge, Michael Baylson, was pretty clear that he would not be happy if Malibu Media tried to squeeze out of the case.

At the beginning of the month, Malibu filed its "amended complaint" against the "John Does" in question, which gave up on some of the arguments in the original complaint and instead focused on direct infringement claims -- while also expanding the number of works infringed.

Yesterday, the Does hit back. It's interesting to note that they've signed up Marc Randazza (along with Jordan Rushie) to help them, as Randazza has both been on the other side of some porn copyright trolling cases and was also the lawyer largely responsible for bringing down the famed copyright trolling operation Righthaven. His work with porn studios to take part in similar cases has resulted in some worries of ulterior motives in taking on John Does in other cases, though that seems to be a bit paranoid.

Either way, the Does hit back hard. They're throwing the kitchen sink at Malibu Media. Among other things, they're claiming that the decision to expand the case to other possible infringements is ridiculous since the defendants use dynamic IP addresses, and Malibu is basing the other infringements on the same IP, but a totally different date or time. Also: the defendants claim that Malibu initially argued that all of the Does needed to be lumped together in a single lawsuit because they represented a "swarm" and as such had to be tried together. Except, in the amended complaint, they move away from that completely (no surprise, since the judge carved out just these few defendants). However, the defendants point out the inconsistency:

When considering litigating the “swarm theory,” Malibu was faced with the prospect of
dozens of defendants, joined in their common defense against the plaintiff, with an initial seeder
who very well may have had a license to publish the works to BitTorrent or elsewhere. When
push came to shove, Malibu decided to dismiss more than eighty percent of the defendants it
initially sued, despite its prior claims that the cases were brought against unified “swarms.”
Malibu apparently thought better of the swarm theory, and decided to reduce the number of
defendants. However, Malibu cannot properly abandon its foundational theory and still leave the
case against Doe 13 intact. The swarm theory of liability relies upon a “swarm” of defendants
and renders these now-dropped defendants indispensable to the action. Without even an
allegation against the initial seeder, we have no idea whether Malibu itself seeded the relevant
files. As Malibu does freely distribute the relevant films, it is entirely possible, if not most
likely, that the initial seeder had permission to distribute the files via BitTorrent. If he or she
did not, it is entirely likely that a participant in the swarm, from whom Doe 13 received the file,
may have had such permission. Malibu’s omissions speak loudly in favor of dismissal. Unless
Malibu re-joins these previous defendants, including the initial seeder, the Court must dismiss
the action against Doe 13, who is by Malibu’s own theory incapable of according Plaintiff full
and complete relief.

That paragraph has footnotes to point out that the company Malibu was using to obtain IP addresses, IPP (formerly Guardaley -- remember them?) is accused of actually seeding the files in the first place, which would suggest the copies were authorized. Of course, it's worth noting that Randazza, when on the other side of these cases, has used the swarm argument in the past.

Either way, that's just the warmup for the problems with the amended complaint. There's also a few other problems -- such as that it doesn't appear that Malibu legitimately owned the copyright in question. Oops. First, there's the fact that the filmmaker argued that the key film was a "work for hire" made for Malibu. Except, Malibu only came into existence in early 2011 and the movie was made years earlier. Malibu claimed this was an oversight in the registration process and then sought to register the copyrights properly just recently. However, again there are problems, as the assignment from the filmmaker failed to assign the specific rights under Section 106 of the Copyright Act, which are what you need if you want to sue. This was the critical defect in the Righthaven cases, in that they pretended to assign those rights, but it was in name only since the original copyright holder really retained all the key rights provided under Section 106. Furthermore, the defendants argue that the assignment statement does not really qualify as an assignment, and is, at best, a license.

In this case, the Assignment contains no provision of any exclusive rights from Field to
Malibu Media. The assignment is silent as to what, if any, rights Field has within the films.
Rather than transferring any discernible exclusive rights under Section 106 to Malibu Media, Mr.
Field has executed what is essentially a quit-claim deed to Malibu Media, giving Plaintiff a
jumble of unidentified rights (or perhaps none at all) that, on the face of the assignment, do not
include the rights required to sustain an infringement action: exclusive rights under Section
106. Absent any indication that Field possessed full, undivided interest in the copyrighted
works or exclusive rights therein, there is no basis on the face of the assignment for finding that
Malibu Media acquired any exclusive rights and nothing in the assignment addresses past
infringement.

Then they point out that even if the assignment is proper, it still doesn't help Malibu, because it is not clear when the assignment was made. And, under the law, while you can transfer the right to sue (along with other exclusive rights) for past infringements, that needs to be expressly stated in the assignment. That's not the case here.

Then there are other issues concerning the "swarm" argument. The defendants point out that if they were being sued as part of a swarm, the total awards across all the defendants can't surpass the maximum statutory rate. Yet with a bunch of defendants having settled, it's possible that Malibu has already been "made whole."

Malibu has already recovered significant funds in connection with the infringements
alleged in the Amended Complaint.
Prejudice against Does #6 and #19 before this action was set for a bellwether. (Dkt. Nos. 16 and
17). Presumably, this was because Malibu received adequate settlements from these defendants.
In fact, Malibu may have received doubly-adequate settlements from them – in which case
Malibu is now triple-dipping by seeking damages that have already been satisfied by third parties
Malibu intentionally kept out of this litigation.

Because the swarm is global in scope, and the Plaintiff has likely already been made
whole by other undisclosed swarm members, nothing short of full disclosure and setoff would
allow Doe #13 to evaluate Plaintiff’s ability to bring this action that it repeatedly claims to be
based on the uploading and downloading the exact same file. Since the Plaintiff seeks statutory
damages, if the Plaintiff has already collected the statutory maximum for this work from other
defendants, then the Plaintiff must stop visiting the well.
Malibu filed Notices of Voluntarily Dismissal with

Thought they were done? Not yet. They also claim that Malibu is abusing subpoena powers outside of what was alleged in the complaint. In the amended filing, Malibu notes that its "partner" in identifying infringement, IPP, passed along the info that at least one of the Does has been accused by another IPP customer of infringement as well. As the defendants point out, that's completely irrelevant to the case at hand:

Nucorp, Ltd. is not a party to this action or any other action against Doe #13, and this
allegation is scandalous and impertinent. Furthermore, set forth in more detail below, adding
allegation also violated two court orders forbidding Malibu from abusing its subpoena power for
purposes outside of what was alleged in the Complaint. Accordingly, Paragraph 53 and Exhibit
“F” of the Amended Complaint should be struck .

In one of the other Motions to Dismiss, questions are also raised about whether or not Malibu has the proper and necessary licenses to do business in Pennsylvania where the lawsuit was filed.

There's more, but you get the idea. It certainly looks like some are trying to give Malibu the Righthaven treatment. And we all remember how that went...

from the popcorn dept

We recently wrote about how the receiver for Righthaven's assets, Lara Pearson, was surprised to learn that Righthaven founder and former CEO Steve Gibson had gone out and hired lawyers in an attempt to continue the appeals court cases concerning some of its district court losses on key issues. Given that Righthaven had gone into receivership, and Pearson had effectively taken control while auctioning off what few assets there were, this was a problem. Pearson made it clear to Gibson that he no longer had anything to do with Righthaven, alerted both the lawyers he had hired and the court of what Gibson had done, and hoped that Gibson would go away. No such luck: he's now filed an "objection to the receiver's notification terminating" his job. You can see the whole thing below.

He makes a few points. First, he again reiterates that Righthaven's key lawyer in many of these lawsuits, Shawn Mangano, had simply stopped responding to him back in February. He seems to want to blame the mess he's in on that. Separately, he argues that the receiver did not have the right to take over the company, and that she did not follow specific court rules. Also, he appears to be trying to reclaim ownership of Righthaven, though the argument is complex:

Even if the Receiver’s termination of me as CEO was somehow within her authority
and done within the parameters of permitted procedure, the Receiver’s position that that
somehow divests me of authority would be wrong. A limited liability company is ultimately
governed by its members and the members have chosen Net Sortie Systems, LLC (“Net
Sortie”) as its statutory manager. I am the manager of Net Sortie. While the manager
manages the CEO, in the absence of a CEO, the manager would assume management of all
affairs of Righthaven...

He seems particularly upset that Pearson went out and hired another lawyer -- one who fought against Righthaven -- to help deal with the ongoing appeal, which likely means an effort to get the case closed as quickly and simply as possible. Gibson claims that it's his right to make such hires, despite the dismissal from his job that appears to indicate otherwise. He also keeps suggesting that there's a public interest in having the case heard at the appeals court -- and insists that (the old) Righthaven would succeed on appeal and get a litany of district court rulings against it overturned.

The filing is also chock full of snide remarks directed at Marc Randazza, with Gibson suggesting that the fact that blogs and others in the press have been mocking him is all because of Randazza -- and that the press' interest in this case is somehow unfair to him. Gibson really does seem taken aback at the fact that no one seems to be on his side any more. His own lawyer won't returns his calls. His job at Righthaven has been stripped away. He's being investigated for all this. So you can understand why he's lashing out and going legal, but this can't end well for him.

Rather, it appears that the
Receiver is following the agenda of Mr. Randazza who apparently has a very serious concern
that the Ninth Circuit will rule in Righthaven’s favor and unravel, finally, his vigorous press
campaign, his personal attacks and any right to legal fees he currently enjoys. Unlike Mr.
Randazza, Righthaven generally has made a conscious decision to not litigate matters in the
press, to not engage in personal attacks either before the courts or otherwise and to address the
legal arguments in a clinical fashion.

Independently, as addressed more fully, infra, I remain the manager of the manager of
Righthaven and I should have the right to hire or terminate Righthaven counsel.

from the that's-not-right dept

We'd pretty much thought that the Righthaven saga was over. After all, the company had gone into receivership back in December, and the court-appointed receiver had been auctioning off what little assets the company had in an attempt to satisfy all of the court-ordered attorneys' fees that Righthaven owed to the lawyers of some of the many defendants that Righthaven sued for copyright infringement on a repeatedly-rejected legal theory. At the same time, the CEO/founder of Righthaven, Steve Gibson had stopped showing up in court, had taken another job, and was being investigated by the Nevada State Bar.

As far as the court-appointed receiver, Lara Pearson, knew, Gibson and his wife Raisha "Drizzle" Gibson (who had been "COO" of Righthaven) no longer had anything to do with the company.

And then... she discovered that Gibson had somehow secured another law firm to supposedly represent "Righthaven" in its appeal of the Hoehn case (the first of the big losses that resulted in attorneys' fees being owed). That firm apparently tried to file some documents in the appeal six months late. This was quite a surprise, and Pearson reacted, as she should, by sending notices to both Gibsons, to the law firm that they employed and to the court explaining why this was ridiculous. In the letters, you can tell that Pearson is quite reasonably angry with the Gibsons, whom she reminds no longer have control over the firm, and makes it explicit to them that they were fired back in December. On top of that, she explains her intent to take legal action against the Gibsons for legal malpractice:

Your actions have caused, and continue to cause ongoing harm to Righthaven and its finances. To
put an end to this damage and prevent future harm, I hereby remove any and all authority for you to
act on behalf of the company, and formally place you on notice that the company will be taking legal
action against you for your ultra vires acts as well as for claims of legal malpractice, which led the
company to its current state.

.... Recently, it has come to my attention that you engaged the services of Miller Barondess LLP in Righthaven v. Hoehn.... I was neither informed of nor did I authorized this action, nor did I authorize any expenditure. Engaging yet another law firm and pursuing an appeal that both the Ninth Circuit and the District of Nevada have declined to find has a substantial likelihood of success is not in Righthaven's best interest...

Presently, Righthaven must satisfy more than $350,000 in judgments entered against it.... For you or anyone else acting on behalf of Righthaven to incur new fees or engage in any activity other than mitigating these liability is directly contrary to the company's best interests.

[....]
To be clear, you are fully terminated from any position with Righthaven LLC. You are prohibited from taking further action on its behalf, and may not hold yourself out as an officer, employee, or representative of the company. Any further actions you purport to take on Righthaven's behalf shall be met with requests for injunctive relief and personal sanctions...

The letter to the law firm that Gibson retained is equally direct:

Mr. Gibson does not and has not had authority to enter new contracts and incur new expenses for the company, which presently must satisfy more than $350,000 in judgments entered against it.

I was unaware that Mr. Gibson had retained your firm until Mr. Hoehn's counsel inquired about this development and whether I had approved it. Mr. Gibson has no authority to act on behalf of Righthaven -- and even if he did, the act of pursuing this appeal would add further costs onto Righthaven's already substantial debts -- which I would not have approved... I demand that you cease all billing activity immdiately. I also demand that you provide me with a full accounting of all funds in trust for Righthaven.... All future actions taken with respect to Righthaven require my approval, as I am the only person with the authority to make decisions on Righthaven's behalf unless and until my receivership is terminated.

Finally, in the filing with the court, Pearson notes that this action indicates that Gibson has been hiding certain Righthave funds/assets:

Instead of satisfying Righthaven's substantial judgments, Gibson has elected to allocate Righthaven funds that have been concealed from me to pursue appeals over rights that Righthaven no longer owns, and has done so in a manner that further imperils what is left of Righthaven's assets with additional attorneys' fees awards and sanctions.

from the down-they-go dept

Reminiscent of the Righthaven cases, where once judges realized what was really happening they quickly started dumping them, it seems that we're reaching the tipping point with porn companies playing the copyright trolling game as well. More and more of the attempts to seek expedited discovery are getting rejected in sternly worded rulings from judges who recognize that the sole purpose of the lawsuit isn't to go to trial, but to get expedited discovery in order to shake people down for cash. The latest such ruling in an increasingly long line comes out of the Eastern District of NY, where judge Gary Brown issued a nice smackdown on copyright trolls. The judge first notes the ridiculousness of relying on IP addresses to identify the individuals, citing a bunch of cases, before noting that an IP address simply does not indicate the "true identity" of the defendant.

In sum, although the complaints state that IP addresses are assigned to “devices” and thus by discovering the individual associated with that IP address will reveal “defendants’ true identity,” this is unlikely to be the case. Most, if not all, of the IP addresses will actually reflect a wireless router or other networking device, meaning that while the ISPs will provide the name of its subscriber, the alleged infringer could be the subscriber, a member of his or her family, an employee, invitee, neighbor or interloper

There are a number of issues specific to the claims of the plaintiff, K-Beech in this case, including its failure to register the copyrights in question, and a weak attempt at lumping in a trademark claim after this came to light. However, what becomes clear pretty quickly is that the judge isn't buying any of this, and sees that it's really just an attempt to use the courts to shake people down. It starts off with the discovery request going far beyond what's necessary to take a case to trial:

However, not all the information sought is required to advance the claim. For example, in addition to names and addresses, plaintiffs seek both the home telephone numbers and email addresses of the putative John Does... information which is clearly not required to proceed with this action. In particular, obtaining the home telephone numbers seems calculated to further plaintiffs’ settlement strategies, discussed above, rather than advancing their claims by allowing them to effect service.

But the larger point is that the court recognizes these kinds of copyright trolling lawsuits as "abusive litigation tactics." While the court notes that it can and should encourage settlements, it also notes that the rules say those settlements should be "just" and it's not clear that's what's happening here:

Our federal court system provides litigants with some of the finest tools available to assist in resolving disputes; the courts should not, however, permit those tools to be used as a bludgeon.

The court then goes on to agree with many other courts in noting that lumping a bunch of defendants together in the same lawsuit is improper joinder, and agrees to only allow discovery on the very first IP address named in each of the lawsuits being considered.

On the whole, there isn't that much different about this ruling from a bunch of other recent rulings, but it's another one to add to the pile, and it gets clearer and clearer every day that the courts are now aware of how trolls are abusing the system, and less and less likely to allow such abuse.

from the sports-and-porn dept

When one of the many judges smacking down Righthaven ordered that the company's intellectual property be auctioned off, we wondered just what that would actually include, since it's not clear whether Righthaven really owns any copyrights, or any intellectual property beyond its own trademarks. The righthaven.com domain name was the first item sold, and now Lara Pearson points us to the news that another selection of Righthaven IP is now up for sale on eBay.

The list itself is pretty amusing, apparently comprised of two porn movies and a selection of newspaper articles about sports (presumably from the Las Vegas Review Journal). Of course, as we noted originally, even though these copyrights are registered in Righthaven's name, it's likely that they aren't actually valid or enforceable, since the whole crux of the Righthaven saga is that many of the rights transfers to the company were shams, so the original copyright holders still control the works. Buying one of these registrations at auction is a way to own a piece of copyright trolling history, but it's probably not going to make you the legal owner of Ebony Amateurs Vegas Edition #10.

Also up for auction is the trademark on the name Righthaven itself. When righthaven.com sold, it was turned into a service offering "hosting with a backbone" in a somewhat ironic use of the domain. I suspect we'll see something similar happen with the Righthaven trademark, since the company's dismal reputation and long list of legal failures makes it a pretty unappealing brand for any purpose other than parody or satire.

from the contempt-of-court dept

We recently wrote about Righthaven CEO Steve Gibson's bizarre claim that a court order directed at him is inapplicable because he's just the CEO, and the company's own lawyers (who he blames everything on) won't return his calls. Now the EFF (who is representing Thomas DiBiase in the case) has filed a response (pdf) in which they highlight how positively insane it is for Gibson to pretend that, as a CEO, he can avoid responding to court orders directed as a company. The whole thing is worth reading -- these are just a few good snippets (it was tough to narrow it down to figure out which ones to quote):

Mr. Gibson’s claim that he has “not heard from Righthaven’s legal counsel [Mr. Mangano]
since February, 2012,” and that Mr. Mangano has simply disappeared is similar to Mr. DiBiase’s
experience.2 Resp. at 3. However, it is quite perplexing in light of Righthaven’s consent to the
withdrawal of attorney Dale Cendali just last week in Righthaven v. Democratic Underground,
Case No. 10-cv-01356-RLH-GWF (Dkt. 186) (March 21, 2012), knowingly leaving that case
solely in the hands of Mr. Mangano. Presumably Mr. Gibson, as a responsible CEO, would not
give that consent knowing it left Righthaven without representation.

[....]

Mr. Gibson asserts Righthaven lacks the funds to order the transcript. Resp. at 6, n.5.
Mr. Gibson does not provide any evidence to support his claim of no funds (the very evidence
sought by the underlying February 7 Order). To the extent that Mr. Gibson is attempting to
belatedly assert an impossibility defense, he has utter failed to show “categorically and in detail”
why he is unable to comply.... Even accepting that “Righthaven currently has no revenues.” ... this does not mean it has no assets or access to funds. Indeed, Mr. Gibson specifically states
there is “no reason to believe that one or more of Righthaven’s parents would not continue to make
capital contributions....” Mr. Gibson is obliquely referencing himself. As noted
previously, Righthaven’s Bank of Nevada statements show that Mr. Gibson has been personally
funding Righthaven to keep its balance just above zero.

Moreover, Mr. Gibson admits that Righthaven had access to sufficient funds to pay
Mr. Mangano for months after its revenue dried up, asserting “[u]p until Mangano became totally
incommunicado [mid-February 2012], Righthaven fulfilled all payment obligations to Mangano.”... Righthaven’s bank records show that Mr. Mangano was being paid regularly in
installments of around $2,475.00.... The money
Righthaven will now save by not paying Mr. Mangano is more than enough to pay for the
transcript of a half-day debtor’s examination. Mr. Gibson’s deliberate decision not to use funds
available to Righthaven does not constitute “impossibility.”

[....]

Perhaps anticipating this obvious course of action, Mr. Gibson asserts, without citation, that
he “cannot represent Righthaven before the Court” and that he does not have the “capability to
personally appear before the Court without legal counsel.”.... This assertion is belied by
the fact that Mr. Gibson actually has represented Righthaven before this Court in this case. See
Order Granting Substitution.... Indeed, three other Righthaven in-house counsel have
represented Righthaven over the course of this litigation: Charles Coons, Joseph Chu and Anne
Peroni. When Mr. Gibson was representing Righthaven in litigation, he often negotiated directly
with opposing counsel, and has appeared in court. There is no impediment to Mr. Gibson entering
an appearance, especially if that is what is required for him to comply with court orders.

The filing also attacks the ridiculous notion that Gibson did not "have notice" of the order against Righthaven, even though its lawyer, Shawn Mangano, had received notice. As the EFF notes, if the court accepts Gibson's bizarre claim, anyone in a lawsuit can "avoid" notice by simply having a lawyer who refuses to pass along the notices. That's clearly not how the law works. Furthermore, the EFF quotes another case about how a party in a lawsuit can't just turn against their own lawyers and blame them:

Mr. Gibson has no one to blame but himself for Mangano’s inaction. Mr. Gibson
“voluntarily chose this attorney as his representative in the action, and he cannot now avoid the
consequences of the acts or omissions of this freely selected agent.”...

There's a lot more in there that raises serious questions about Gibson's claims (yet again). I don't think I've ever seen a legal strategy executed quite as stupendously poorly as Righthaven's continued bungling of almost everything. What's especially stunning is going back to the very beginning and remembering just how cocky Gibson was about Righthaven as a brilliant business and legal idea.

from the you-can't-make-this-up dept

Every time you think the Righthaven farce must be over -- or, at the very least, couldn't get any stranger -- something new pops up. The latest is that Righthaven CEO Steve Gibson (who, as we've mentioned, has already moved on to a new lawyer job, while still technically being CEO of Righthaven) has submitted a bizarre filing with the court that basically plays the "me? I've got nothing to do with any of this!" card in trying to avoid having to provide some key documents in one of the many cases where Righthaven owes attorneys' fees for its bogus lawsuits.

For a rather complete takedown of Gibson's filing and why it may create significant legal problems for Gibson later, I recommend Patrick Anderson's vicious dissection of the filing. Gibson, a lawyer now working for a big law firm, claims that he's a "non-party" in this lawsuit, despite being the CEO and key officer in the company in question. He insists that, despite being a lawyer, as the CEO he cannot act as a lawyer for the firm. However, as Anderson notes, in the early days, Gibson did exactly that and signed various filings for Righthaven:

Elsewhere in the filing, Gibson basically says that Righthaven's own lawyer, Shawn Mangano, simply refuses to respond to his contact attempts, and he actually tells the court it should compel Mangano to appear. Yes, this is the CEO of a company telling the court that it can't contact its own lawyer and that the court should step in and force that lawyer to show up:

I have attempted by way of letter, telephone and electronic mail to contact Mangano in order to receive updates on the statuses of all cases to no avail. Mangano has been entirely uncommunicative. Mangano cannot complain of non-payment, as Righthaven made all required payments, until such time as Mangano became entirely uncommunicative.

As Chief Executive Officer (“CEO”) of Righthaven, I do not have any means to effect compliance with the Minute Order but stand prepared to assist within the province of the law and not in a manner that causes me to engage in personal efforts above and beyond that which the CEO of Righthaven is capable of doing with the limited resources currently available to Righthaven, assuming I receive notice of same.

Therefore, Gibson hereby respectfully requests this Court to order Mangano to appear before the Court and effect compliance with the Minute Order. Gibson further requests this Court order Mangano to reinvigorate Mangano’s representation of Righthaven until such time as this Court would find appropriate the withdrawal by Mangano.

Anderson, however, notes a bizarre contradiction within Gibson's own filing. He notes both that Gibson states that "Righthaven has no funds" to order a copy of the transcript which the court is demanding of him... but then also notes that Mangano shouldn't fear not getting paid for working for Righthaven because "one or more of Righthaven's parents" would likely "continue to make capital contributions." In other words, Gibson appears to both plead poverty in paying for a copy the court has ordered him to get and the fact that it has access to money to pay lawyers to get that same document in the same filing. Wow.

Anderson also mocks Gibson for later "apologizing" in the filing for not having access to specific case citation page numbers, noting that while this is a minor point, earlier in the filing Gibson admits that he is employed as a lawyer at a giant law firm, and is filing this particular court filing via his CM/ECF login (Case Management/Electronic Case Files), which he has because of his employment at that law firm. Anderson cuts through the crap and points out that Gibson must be hoping the judge is a complete moron:

So “convenience” allows Gibson to use his ECF account, but apparently does not allow him to use an actual law library to read the cases cited against him and respond with accurate page numbers.

Anderson, a patent attorney who often writes about how companies can use patents to make money, worries that Righthaven and Gibson's crazy antics will come back to haunt patent trolling firms:

When Gibson eventually defends himself in an argument over whether he should be protected by the corporate veil, his opponents will make sure each little infraction comes back to bite at his credibility. If Gibson loses, and becomes personally liable for actions of his LLC, that decision becomes reported and used as precedent in other cases. At minimum, that’s going to raise legal costs and uncertainty for LLC owners everywhere, particular in the IP arena because every patent monetization company is going to be compared to Righthaven, and even the owner of a patent who loses on a good faith argument of infringement or validity may end up having personal assets at least threatened as a result.

I assume that some folks around here don't think that's a particularly bad result. And even though I'm not a fan of Righthaven or patent trolling companies, I do think that we should be pretty careful about under what circumstances the corporate veil should be pierced (though I know many here disagree). To be honest, the more we see about the way Righthaven acted, I think there is growing evidence that it was abusing the corporate structure to do questionable things -- and thus, this might be a case where corporate veil piercing makes sense. As long as other trolling operations aren't doing that, then perhaps this won't be as big an issue.